Bill amended to allow craft brewers to increase beer production

Arizona's craft breweries have compromised on a bill that will allow them to produce more beer than currently allowed in the state while maintaining their restaurants and bars.

The Arizona Craft Brewers Guild is pushing for a change in state law this year that would clarify that the nearly 60 microbreweries could maintain restaurants and bars after exceeding a certain amount of production. Senate Bill 1030 was held up last month in a committee when the bill's opponents raised questions about its legality.

The Guild then compromised on an amendment, which passed its first test Monday while advancing unanimously through the Senate committee where it had been held up. The bill's sponsor is Sen. Kelli Ward, R-Lake Havasu City.

The new bill language will allow microbreweries to produce as much as 200,000 barrels of beer annually among multiple locations. The cap is 40,000 barrels today. A barrel is 31 gallons, or two full-size kegs.

"This is exactly what we asked for," said Rob Fullmer, executive director of the Arizona Craft Brewers Guild.

Breweries need to know there is a path for them to continue growing if they are to continue investing in Arizona, he said.

Under the current law, brewers who make more than 40,000 barrels of beer a year are not allowed to run restaurants. That means the bigger breweries in the state, such as Four Peaks Brewing Co., can't keep expanding without selling or closing their restaurants, or changing the law.

Supporters hope the amended SB 1030 moves through a full vote of the Senate this week.

Under a three-tier system that dates back to the end of Prohibition, a company only can be a producer, distributor, or retailer of beer in the state, and can't do business as more than one of those.

In 1987, Arizona passed special rules to allow small brewers to make and sell beer at their restaurants and bars. That allows them to act as a producer and retailer, with no distributor.

Arizona brewers making less than 40,000 barrels of beer a year get special privileges, such as being allowed to "self-distribute" beer to a second location themselves without a distributor. Current law also allows them to self-distribute 3,000 barrels of beer a year to other retailers.

Under the amended bill, a brewer would have to give up those self-distribution rights once it exceeds 40,000 barrels, except for its on-site retail sales. Brewers also could not expand to any new retail locations once exceeding 40,000 barrels.

"We don't know of any opposition at all," Fullmer said of the amended bill.

The three companies that originally opposed SB 1030 approve of the amendments, Fullmer said. Those companies were Alliance Beverage Distributing, Southern Wine and Spirits and Young's Market. Collectively, the opponents refer to themselves as the Arizona Wine and Spirits Association.